Account Purchase Agreement Template for India

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Key Requirements PROMPT example:

Account Purchase Agreement

"I need an Account Purchase Agreement for a manufacturing company selling its accounts receivable to a private financial institution in India, with a facility limit of INR 50 crores and including provisions for ongoing purchases throughout 2025."

Document background
The Account Purchase Agreement serves as a critical financial instrument in the Indian business landscape, enabling companies to monetize their accounts receivable and improve working capital efficiency. This agreement type is commonly used when a business wishes to sell its accounts receivable to a financial institution, factor, or bank in exchange for immediate funds, typically at a discount. The document comprehensively covers the rights and obligations of all parties, purchase mechanics, pricing formulae, and operational procedures, while ensuring compliance with Indian regulatory requirements including the Indian Contract Act, 1872, Transfer of Property Act, 1882, and the Factoring Regulation Act, 2011. It's particularly relevant in scenarios where businesses seek alternative financing methods or wish to optimize their working capital cycle through receivables monetization.
Suggested Sections

1. Parties: Identifies and provides details of the seller and purchaser of the accounts

2. Background: Explains the context of the agreement, including the seller's business and the nature of the accounts being sold

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Sale and Purchase: Core transaction terms including purchase price, payment mechanics, and transfer provisions

5. Conditions Precedent: Prerequisites that must be satisfied before the agreement becomes effective

6. Representations and Warranties: Statements of fact and assurances from both parties, particularly regarding the accounts being sold

7. Covenants: Ongoing obligations of both parties during the term of the agreement

8. Purchase Mechanics: Detailed procedures for identifying, offering, and purchasing accounts

9. Settlement Process: Procedures for settlement of purchased accounts and payment transfers

10. Indemnification: Provisions for compensation in case of breach or losses

11. Events of Default: Circumstances constituting default and consequences thereof

12. Term and Termination: Duration of agreement and circumstances allowing early termination

13. Confidentiality: Obligations regarding protection of confidential information

14. Notices: Process and requirements for formal communications between parties

15. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes

16. Miscellaneous: Standard boilerplate provisions including assignment, amendments, and severability

Optional Sections

1. Security Interest: Required if additional security is being provided for the transaction

2. Third Party Rights: Needed if any third parties have rights under the agreement

3. Credit Enhancement: Include if there are any guarantees or other credit support mechanisms

4. Electronic Records and Signatures: Required if the agreement will be executed or maintained electronically

5. Foreign Exchange Provisions: Include if transaction involves cross-border elements or foreign currency

6. Service Level Requirements: Needed if ongoing servicing of accounts is part of the arrangement

7. Data Protection: Required if personal data processing is involved in the transaction

8. Anti-Money Laundering Compliance: Include for transactions with financial institutions or regulated entities

Suggested Schedules

1. Schedule 1 - Eligibility Criteria: Detailed criteria for accounts that can be purchased under the agreement

2. Schedule 2 - Purchase Price Calculation: Formula and methodology for calculating the purchase price of accounts

3. Schedule 3 - Form of Purchase Notice: Template for notices offering accounts for purchase

4. Schedule 4 - Account Details: List and details of initial accounts being purchased, if applicable

5. Schedule 5 - Operational Procedures: Detailed procedures for day-to-day operation of the purchase facility

6. Schedule 6 - Required Documents: List of documents required for each purchase transaction

7. Schedule 7 - Form of Assignment Deed: Template for the deed of assignment for purchased accounts

8. Appendix A - Contact Details: Contact information for key personnel of both parties

9. Appendix B - Compliance Requirements: Detailed regulatory compliance requirements and procedures

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Banking and Financial Services

Manufacturing

Trading and Distribution

Information Technology

Healthcare

Construction and Infrastructure

Retail

Logistics and Transportation

Telecommunications

Professional Services

Energy and Utilities

Automotive

Relevant Teams

Legal

Finance

Treasury

Accounts Receivable

Credit Control

Compliance

Risk Management

Operations

Commercial

Business Development

Contract Administration

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Accounts Receivable Manager

Credit Controller

Legal Counsel

Compliance Officer

Risk Manager

Commercial Director

Operations Manager

Financial Controller

Chief Executive Officer

Company Secretary

Business Development Manager

Contract Manager

Industries
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India. It sets out essential elements of a valid contract including offer, acceptance, consideration, and capacity to contract.
Transfer of Property Act, 1882: Governs the transfer of property rights, including actionable claims and receivables. Particularly relevant for the assignment provisions in account purchase agreements.
Registration Act, 1908: Determines which documents need to be registered. While account purchase agreements generally don't require registration, any security interest created might need registration.
Indian Stamp Act, 1899: Determines the stamp duty payable on various instruments including assignments and transfers. The agreement may need to be appropriately stamped to be admissible as evidence.
Banking Regulation Act, 1949: Relevant if any party is a banking institution, as it governs banking operations and financial transactions in India.
Foreign Exchange Management Act, 1999: Applicable if the transaction involves foreign parties or cross-border elements, governing foreign exchange transactions and overseas investments.
Factoring Regulation Act, 2011: Specific legislation governing factoring business and assignment of receivables to factors, including registration requirements and rights of factors.
Information Technology Act, 2000: Relevant for electronic execution of agreements and digital signatures, if the agreement is to be executed electronically.
Indian Evidence Act, 1872: Important for evidentiary requirements and admissibility of documents in case of disputes.
Goods and Services Tax (GST) Laws: Relevant for tax implications on the purchase of accounts/receivables and related services.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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